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Jefferies cuts rating on Assura to 'hold'
(Sharecast News) - Jefferies has trimmed both its rating and price target on Assura, the specialist UK property developer and investor.
The broker cut its rating to 'hold' from 'buy', while the price target was reduced to 45p from 52p.
The downgrade follows Assura's announcement on Tuesday that it had agreed a £250m joint venture with Universities Superannuation Scheme to support investment in essential NHS infrastructure.
The primary care specialist also posted a 3.8% rise in net rental income for the year to March to £143.3m.
In a note published on Wednesday, Jefferies said: "Loan to value is 43% with the new joint venture, but more action is needed to allay the risk of a credit cut.
"Options include an equity injection - shares trade at a 13% discount to net asset value - asset disposals (earnings dilutive by around 300-400bps) and curtail development (Assura is being priced out).
"Our price target is cut to 45p, factoring in the dilutive impacted of [estimated] £200m per annum high yield/low growth asset sales to degear by 30%, but the 7.8% dividend yield risks being uncovered."
As at 1115 BST, shares in the FTSE 250 real estate investment trust were down 3% at 40.96p.
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